Industry Committee on Feb. 10th, 2009

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Masse. Thank you, Minister.

Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

It's interesting. From time to time, Minister, we hear the opposition comparing our country to some other country on one sort of cherry-picked item during question period. I think what's important to remember is that from an external standpoint most external observers are saying that Canada is positioned better than other countries.

[The Chair, Conservative, Michael Chong]

Mr. Lake, one moment please.

Mr. Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Last week, we debated what role the independent member for that riding could play on this committee, and we thought of him as a full person who did not belong to any party. If the independent member is not in attendance at the committee, we should skip his turn completely and the next in line should have the floor.

[The Chair, Conservative, Michael Chong]

You’re right. The independent member is not here today, but under the motion our committee adopted last week, it is up to the committee chair to decide a number of issues.

Our committee meeting today will therefore involve three rounds of questions and answers, if time permits.

There are three Liberal members who are going to get four questions.

The two Bloc members will get three questions.

There's one member of the NDP who's going to get three questions, and four members of the Conservatives who are going to get five questions.

I decided to give the Independents' slot to the Conservatives so that we can have fairness here.

[Robert Vincent, Bloc, Shefford, QC]

If I understand correctly, the chair will favour one party over the others, or will alternate with the others. I am happy to leave that decision to the chair’s discretion, but if it works one way and not the other, we will have a serious problem, and I will then challenge your decision.

[The Chair, Conservative, Michael Chong]

I don't agree.

[Robert Vincent, Bloc, Shefford, QC]

That is your right.

[The Chair, Conservative, Michael Chong]

Each party will get one question more than the number of members it has present.

[Robert Vincent, Bloc, Shefford, QC]

What I was really intending was to show that the Conservatives themselves proposed that allocation so that the independent member would have a voice. We went with that. The opposition party took advantage of the fact that Mr. Arthur is independent and that we want him to be able to speak. We agreed on that. But still, one party should not be given more rights because we gave an advantage to someone who does not belong to any party.

[The Chair, Conservative, Michael Chong]

Respectfully, I appreciate your opinion, but I've decided to give it to Mr. Lake. We'll have one more round for the Bloc Québécois, another two rounds for the Liberals, and another round for the New Democrats.

Mr. Lake, please proceed.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair.

As I was saying before the point of order, most external observers are saying that Canada is positioned better than other countries.

We have the London Telegraph, for example, during the most recent G-8 summit, lamenting a lack of leadership among the G-8 leaders, but then specifically singling out our prime minister for many positive things and wrapping up their article by saying that if the rest of the world had comported itself with similar modesty and prudence we might not be in this mess. They were talking specifically about our prime minister.

There was the World Economic Forum ranking our banking system number one in terms of stability, and the OECD and IMF both projecting that Canada will emerge stronger, a leader in growth.

Of course, going into this situation, we were the only G-8 country to be running surpluses for the last three years. In fact, every other G-8 country ran deficits in each of the last three years.

All of these external indicators are talking about Canada being positioned better than other countries. Maybe you could speak for a moment about what it is we've done that has put us in that situation.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you very much for the question.

I think it's a combination of things, including the debt reduction, the tax relief, being open for business, having the Advantage Canada plan that looks at investments in science and technology, and our infrastructure investments would fall under that category as well.

When you look at debt, for instance, as a percentage of GDP, we are under 30% right now. Even with all of the deficits that are required to help stabilize our economy, our debt-to-GDP ratio goes maybe a couple of points, maximum, above 30% for a period of time and then it starts to decline, as it has been declining over the last few years.

Just by way of comparison, even before today's announcement by the Treasury Secretary in the United States, the American debt-to-GDP ratio was projected to be 55% of GDP. We're around 28%, 29% of GDP.

Clearly we're in a better position. It's that kind of management that allows us, when we have to inject liquidity into the system, to not only have the ability to do so but to then bounce back fiscally more quickly than most countries. That's just one example, but I think it's a very germane one.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Good.

In round table meetings I've had in my own constituency in Edmonton, one of the specific things that's been brought up as a concern time and time again is the notion that we might fall into a structural deficit situation, as opposed to this temporary deficit situation.

I think there's a recognition that we're on a very positive long-term track here in Canada, but there was a lot of concern registered about the short-term track and the measures we're taking right now. My constituents were just making sure that it's clear to me as their member of Parliament that they want to ensure these are short-term measures and that we're going to come out of this in a surplus situation moving forward and continue on that positive long-term track we were on.

Maybe you could speak a little bit in terms of some of the measures and their time-limited component.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you.

I think you're quite right. I agree with your constituents that it's important not to get into a long-term deficit. We've seen that movie before, in the 1970s and 1980s, and we don't want to return to that.

You're quite right, as well, that a lot of the provisions found in the economic plan are designed to help with the short-term challenges of liquidity and stimulus, but they are time limited for two years or, in some cases, three years maximum. Some of them, including some of the infrastructure provisions, are “use it or lose it”.

We're looking for shovel-ready projects. If we can't find them within the next two years, those funds lapse. I think that's being responsible. It's an understanding that we have a short-term issue here on which we have to be helpful and, therefore, that is the focus of this budget.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Finally, to wrap up my time here, I just want to clarify something on Genome Canada, if I could. My son has autism. Many people in this room know this. I've had the opportunity to talk to Genome Canada about their autism genome project, which is something they've worked on.

I was surprised when I read in the newspaper the day after the budget that we'd cut all funding for Genome Canada and that people were going to lose their jobs immediately. There were all sorts of things. I know that there's been some clarification since then. In fact, I think Genome Canada has actually come out in favour of the budget, but I'd like some clarification on that, if you could.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Sure. I think it's an important issue, because there was some confusion over that.

In Budget 2007, we invested $100 million over five years in Genome Canada. In Budget 2008, there was another $140 million over five years. They still have a budget. There were two infusions of that, in 2007 and 2008. There are not one but two five-year funding allocations for Genome Canada.

We obviously believe in Genome Canada. We believe in the work they're doing. I had a lot to do with them as Minister of Health as well. They are crucial for our biotech industries, so we continue to support them. It's utterly consistent with our science and technology strategy.

[The Chair, Conservative, Michael Chong]

Thank you, Minister. Thank you, Mr. Lake.

Ms. Coady.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Thank you very much.

Thank you for joining us here today. I certainly appreciate it. I appreciate your officials taking the time as well.

These are very challenging economic times for all of us in this country, and in particular for businesses, especially small business. One of the key aspects of ensuring a vibrant business community is access to capital, so my first round of questions has to do with access to capital.

In particular, I want to just chat about the Small Business Loans Act. As you know, this is a vehicle that is assisting small business. However, it needs to be streamlined, and access to that program needs to be improved. My first question is specifically around that particular program. What are you doing to ensure that's available?

Part B of that, under the access to capital, has to do with venture capital and the lack of venture capital right now in this country, as well as the challenges to venture capital and angel investment, and what specifically you are doing to assist. I know there's some program money under BDC. Perhaps you can talk about this so that I can ask you further questions.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Obviously, I appreciate the questions.

Let me just say generally that, as part of what we're doing, we're trying to ease up on the credit conditions a little bit. The loan portfolio of BDC as of December 31, 2008 was $10.9 billion, which is an 11% increase over the last year. We're providing $2.2 billion in new loan authorizations for the first three quarters of 2008-09. We have new money in this budget as well. We're authorized by Budget 2009 to have an increase in BDC's capital limit to $3 billion from $1.5 billion. These are things that will be helpful to BDC in continuing its role and responsibility with small and medium-sized enterprises.

With venture capital, you raise a good point. As we know, Canada lags the United States, for instance, in our ability to have angel investors and to have venture capital. We need to do better in that category. We do have a commitment to utilize BDC for a venture capital fund. That is not up and running yet, but certainly if you have any suggestions on that, I'd be more than happy to hear you out.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Well, thank you; I do have suggestions.

Under the BDC program, you're absolutely correct that there is money allocated for venture capital. My concern, being from Newfoundland and Labrador, is that it generally stops at Halifax, with very limited investments in my province—though there have been some, and I would echo that there are other challenges across this country. So we're having some challenges with BDC from a business perspective, and I think we have to do better there.

I asked you about the Canada Small Business Financing Act, because there are challenges under that program. It needs to be streamlined and we need to eliminate the red tape. Perhaps you can comment on that.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Mr. Dicerni, would you like to reply to that?

[Richard Dicerni]

I have two points. One is that the budget increased the ceiling. Second, in terms of red tape, if you have specific suggestions to improve administration, I'll book an appointment and come to see you at your office.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Thank you.

My next questions concern the Red Wilson report on competitiveness. This budget has a lot of short-term initiatives, but I'm talking about the longer term.

I guess there are two things that we should be looking at from an industry perspective, the short-term challenges to the economy today, and what we're going to go to ensure productivity and competitiveness into the future.

I would like to ask, what has happened to that report? Where are we? We've seen some small things in the budget. Where are we with that report and how are we moving forward on it?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Well, how do you eat an elephant? One bite at a time.

The Budget Implementation Act, 2009, Bill C-10, has a good chunk of Red Wilson's recommendations in it, including to protect consumers when it comes to Competition Act changes; to streamline merger review to make sure we focus on the cases that we should focus on; and to provide greater powers of enforcement when it comes to Competition Act issues and protecting consumers. Then, finally, on the Investment Canada side, as we discussed a little bit earlier, there are some changes designed for us to focus on larger transactions and to include a national security test to protect Canada's interests.

That's all found in Bill C-10, and I hope you'll be able to support it.